ACIT, Cuttack V. Paradip Port Trust, Jagatsinghpur

ITA 121/CTK/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5351 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUNAL SINGH
• Assessee Lawyers: J M PATTNAIK
• Keywords: Capital asset; Depreciation; Revenue expenditure; Capital expenditure
• Section: 43B; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ./ ITA NO. 121 / CTK /20 1 3 ( / ASSESSMENT YEAR : 20 10 - 20 11 ) ACIT, CIRCLE - 1 (1), CU TTACK VS. PARADIP PORT TRUST, PARADEEP, JAGATSINGHPUR ./ ./ PAN/GIR NO. : A AA LP 0055 A ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI KUNAL SINGH, CIT DR /AS SESSEE BY : SHRI J.M.PATTNAIK , AR / DATE OF HEARING : 12 / 10 /201 7 / DATE OF PRONOUNCEMENT 24 /10 /201 7 / O R D E R PER SHRI PAV AN KUMAR GADALE, JM : T HE REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER DATED 29.12.2014 , PASSED BY THE CIT(A), CUTTACK, FOR THE ASSESSMENT YEAR 20 10 - 201 1 . 2 . FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE IS A LOCAL AUTHORITY AND RUNNING A MAJOR PORT AT PARADEEP AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 20 10 - 11 ON 27.09.2010 DECLARING TOTAL INCOME OF RS. 4,16,73,05,074/ - AND THE RETURN OF INCOME WAS PROCESSED U/S.143(1) OF THE ACT . SUBSEQUENTLY, NOTICE S U/S.143(2) & 142(1) OF THE ACT WERE SERVED , CALLING VARIOUS DETAILS, ACCOUNTS AND EXPLANATIONS. IN COMPLIANCE, TH E LD. AR OF THE ASSESSEE APPEARED AND FILED THE DETAILS AND VARIOUS ISSUES WERE DISCUSSED . THE AO ON PERUSAL OF THE FACT S FARMED THE ASSESSMENT U/S.143(3) OF THE ACT MAKING ADDITIONS ON ACCOUNT OF PRIOR PERIOD EXPENSES, PROVISION FOR ACCRUED EXPENSES, PROV ISIONS TOWARDS PENSION FUND, INTEREST ACCRUED ON INVESTMENT ON CAPITAL ASSET, CAPITAL ITA NO. 121 /CTK/201 5 2 EXPENDITURE CLAIMED AS REVENUE EXPENDITURE AND ASSESSE D THE TOTAL INCOME AT RS. 861,59,86,953/ - , AND PASSED THE ORDER U/S.143(3) OF THE ACT DATED 19.3.2013. 3 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) CONSIDER ED THE GROUNDS RAISED BY THE ASSESSEE AND ALLOWED THE APPEAL OF THE ASSESSEE. 4 . AGAINST THE ORDER OF CIT(A), THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS : - 1. PRIOR PERIOD EXPENSES : WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE UNDER THE HEAD PRIOR PERIOD EXPENSES TO THE TUNE OF RS.2,88,05,359/ - 2. PROVISIONS FOR ACCRU ED EXPENSES : WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS JUSTIFIED IN DELETING THE VARIOUS ADDITIONS MADE AMOUNTING TO RS.3,78,73,42,287/ - UNDER THE HEAD PROVISIONS FOR ACCRUED EXPENSES ON THE GROUND THERE IS NO CHANGE IN THE NATURE O F SUCH CLAIM OF CURRENT LIABILITIES IN THE BALANCE SHEET AND VERY MUCH PART OF THE CURRENT LIABILITIES - WHEN ASSESSEE FAILED TO PRODUCE THE DETAILS OF LOAN PAYMENT FROM GOVT OF INDIA. 3. (PROVISION TOWARDS PENSION FUND): WHETHER IN THE FACTS AND CIRCUMS TANCE OF THE CASE ID.CIT(A) IS J UST IFIED IN DELETING THE ADDITION MADE BY THE AO IN THE IMPUGNED ASSESSMENT ORDER FOR PROVISION TOWARDS PENSION FUND OF RS.2,94,94,640 RELYING UPON THE DECISION PASSED BY THE HON'BLE ITAT FOR THE SAME ASSESSEE FOR THE A/Y:20 07 - 08 - WHEN THE RECOGNITION OF SUCH PENSION FUND WAS APPROVED BY THE CIT W.E.F. 03.02.2009, SINCE T HE TRUST WAS FORMALIZED THROUGH THE TRUST DEED EXECUTED ON 03.02.2009 AND THE CONTRIBUTION OF RS .40 ,17,34,360 WAS REMITTED BY THE ASSESSEE DURING THE FINANC IAL YEAR:2009 - 10 OUT OF THE TOTAL PROVISION MADE FOR RS .43 ,12,29, 000 FOR WHICH THE DIFFERENTIAL AMOUNT ADDED TO THE TOTAL INCOME OF THE ASSESSEE .. 4. INTEREST ACCRUED ON INVESTMENT ON CAPITAL ASSET:) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ID. CIT(A) IS JUSTIFIED IN RELYING UPON THE RATIO OF DECISION PASSED BY THE HON'BLE ITAT FOR THE A/Y: 2007 - 08 AND TO HOLD THAT INTEREST ON SUCH FUNDS ARE NOT IN CONNECTION WITH THE REGULAR OPERATION OF THE ASSESSEE, HENCE THE ADDITION OF RS.67 ,49,34,515 CR ORES MADE BY THE AO DELETED - WHEN THE A O NOTICED THAT INTEREST EARNED ON THOSE FUNDS DIRECTLY CREDITED ITA NO. 121 /CTK/201 5 3 TO SUCH FUND'S ACCOUNTS WITHOUT REFLECTING IN THE P&L A/C OF THE ASSESSEE AS REGULAR BUSINESS ACTIVITIES RESULTING THAT INCOME EARNED HAS NOT BEEN OFFER ED FOR TAXATION. 5. CAPITAL EXPENDITURE CLAIMED AS REVENUE EXPENDITURE) :IN THE FACTS AND CIRCUMSTANCE OF THE CASE, ID. CIT(A) IS NOT JUSTIFIED IN CONSIDERING THE EXPENDITURES RELATING TO CAPITAL - EXPENSES AS REVENUE EXPENSES OF RS.61.54IAKH, RS.1,43CR AN D RS.58.17IAKH/ - - WHEN DURING THE ASSESSMENT PROCEEDING ASSESSEE FAILED TO FURNISH ANY SUPPORT OF ITS CLAIM AS REVENUE EXPENSES, ONLY CLAIMING SUCH EXPENSES INADVERTENTLY IN THE P&L ETC IS NOT TO BE ALLOWED AS REVENUE EXPENDITURE .. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE A O TO ALLOWANCE OF DEPRECIATION AT THE HIGHER RATE @15% ON RAILWAYS AND ROLLING STOCK TREATING THE SAME AS 'PLANT AND MACHINERY' AS AGAINST DEPRECIATION OF 10% ALLOWED IN THE IMPUG NED ASSESSMENT ORDER TREATING THE SAME AS 'BUILDING:' .. 7. ANY OTHER MATTER, IF ANY, SHALL BE URGED AT THE TIME OF HEARING. 5 . GROUND NO.1 IS WITH REGARD TO DISALLOWANCE O F PRIOR PERIOD EXPENSES: THIS ISSUE IS COVERED BY THE DECISION OF TRIBUNAL IN ASS ESSEES OWN CASE IN ITA NO. 3 56 /CTK/2012 & OTHER CONNECTED APPEALS, DATED 09.08.2017 , WHEREIN THE TRIBUNAL HAS OBSERVED AT PAGE 10 WHICH READS AS UNDER : - 12.3 WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD CAREFULLY AND FOUND THAT THE FINANCE AND MI SCELLANEOUS EXPENSES RELATING TO PREVIOUS YEAR HAS BEEN SHOWN BY THE ASSESSEE AT RS.1,55,81,270/ - IN SCHEDULE - 17 AND IN SCHEDULE 16 IT HAS BEEN SHOWN AT RS.43,84,412/ - . WE ARE OF THE OPINION THAT THE CIT(A) TOOK A REASONED DECISION BASED ON REMAND REPORT IN RESTRICTING THE DISALLOWANCE TO RS. 1,11,96,858/ - , WHICH IS IN ACCORDANCE WITH THE ACCOUNTING SYSTEM AND, ACCORDINGLY , WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS GROUND AND UPHOLD THE SAME AND DISMISS THE GROUND OF APPEAL OF REVENU E. IN THE PRESENT ASSESSMENT YEAR THE CLAIM OF THE ASSESSEE IS SIMILAR AND FOLLOWING THE JUDICIAL PRECEDENCE , WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS GROUND AND DISMISS THIS GROUND OF APPEAL OF REVENUE. ITA NO. 121 /CTK/201 5 4 6 . GROUND NO.2 IN REGARD T O PROVISION FOR ACCRUED EXPENSES. 6 .1 BEFORE US, LD. DR SUBMITTED THAT THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITIONS ON THE PROVISION FOR ACCRUED EXPENSES , AND ALSO THERE IS NO CHANGE IN THE NATURE OF ITS CLAIMS . THE ASSESSEE HAS FAILED TO PRODUC E THE DETAILS OF LOANS OBTAINED FROM GOVERNMENT OF INDIA. CONTRA, LD. AR SUBMITTED THE INFORMATION WITH REGARD TO BREAK UP OF CURRENT LIABILITIES OF RS.3,78,73,42,287/ - AS UNDER : - A) AUDIT FEE - RS. 80,00,000/ - B) PAYMENT TO CONTRACTORS - RS. 7,74 ,56,094/ - C) OTHER PAYMENTS - RS. 45,03,51,527/ - D) INTEREST ON GOVT. OF INDIA LOAN - RS.255,45,34,666/ - TOTAL - RS.378,73,42,287/ - IN THE ASSESSMENT PROCEEDINGS T HE AO DEALT ON THE DISPUTED ISSUE AND FOUND THAT THE ASSESSEE HAS NOT PRODUCED EVID ENCE IN RESPECT OF CLAIMS . FURTHER DETAILS OF INTEREST ON LOANS TO FINANCIAL INSTITUTIONS WHERE THE PROVISIONS OF SECTION 43B OF THE ACT ARE APPLICABLE ARE NOT AVAILABLE AND THE AO COULD NOT VERIFY THE INTEREST ON LOAN FROM GOVERNMENT OF INDIA WHEREAS LD. CIT(A) CONSIDER ED THE SUBMISSIONS OF THE ASSESSEE , WHERE THE AMOUNT S ARE IN NATURE OF CURRENT LIABILITIES AND HAS DELETED THE ADDITION AND OBSERVED AT PAGE 3 OF THE ORDER AS UNDER : - THE APPELLANT SUBMITTED THAT THE ABOVE AMOUNTS WERE IN THE NATURE OF CU RRENT LIABILITIES AND HAVE FURNISHED THE DETAILS OF THE SAME. THE APPELLANT FURTHER SUBMITTED THAT THERE HAS BEEN NO PROVISION CLAIM FOR SUCH LIABILITIES IN THE P&L A/C. EXCEPT FOR INTEREST PAYABLE ON INITIAL INVESTMENT OF GOVT. OF ODISHA AND INDIA AMOUNTI NG TO RS.21,30,459/ - FOR BOTH THE YEARS. IN FACT THE AMOUNT HAS BEEN KEPT IN THE PROVISION FOR A NUMBER OF YEARS FROM EARLIER PERIOD AS THE SAME WAS THOUGH ASCERTAINED HAVE NOT YET BEEN PAID TO THE GOVT. OF ODISHA/INDIA. I HAVE GONE THROUGH THE ORDER F TH E CIT(A), CUTTACK IN THE CASE OF THE ASSESSEE FOR AY 2009 - 10 WHERE THE CIT(A), CUTTACK HAD FORWARDED THE DETAILS SUBMITTED BY THE AO FOR FURTHER VERIFICATION. AFTER CONSIDERING THE REMAND REPORT GIVEN BY THE AO THE LEARNED CIT(A) AS CONSIDERED THE PROVISI ONS FOR ACCRUED ITA NO. 121 /CTK/201 5 5 EXPENSES SUCH AS AUDIT FEES, PAYMENTS TO CONTRACTORS, OTHER CHARGES, INTEREST OF GOVT. OF INDIA LOAN AND INTEREST ON INITIAL INVESTMENT OF GOVT. OF INDIA TO BE ASCERTAINED LIABILITIES. THERE HAS BEEN NO CHANGE IN THE NATURE OF SUCH CLAIM OF CURRENT LIABILITIES MADE BY THE APPELLANT IN THE BALANCE SHEET FOR BOTH THE YEARS. I THEREFORE FIND THE SAME AS ASCERTAINED LIABILITIES AND VERY MUCH PART OF CURRENT LIABILITIES. IN VIEW OF THE ABOVE, THE ADDITIONS MADE BY THE AO IN THIS REGARD ARE DELETE D. 6 .2 WE C ONSIDERING THE APPARENT FACTS, MATERIAL ON RECORD FOUND THAT ASSESSEE HAS NOT FILED ANY EVIDENCE BEFORE THE AO NOR BEFORE CIT(A) . THE CIT(A) DELETED THE ADDITION BASED ON FINDINGS OF EARLIER ASSESSMENT AND CIT(A) , OUGHT TO HAVE CALLED FOR THE COMMENTS OF AO FOR PRESENT ASSESSMENT YEAR. WE ARE OF THE SUBSTANTIVE VIEW THAT MATER HAS TO BE EXAMINED AND REMIT THE ENTIRE ISSUE TO THE FILE OF AO FOR VERIFICATION AND EXAMINATION AND THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING BEFO RE PASSING THE ORDER ON MERITS. ACCORDINGLY THIS GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7 . GROUND NO.3 IS IN REGARD TO PROVISION TOWARDS PENSION FUND : THE VERY SAME ISSUE IS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSES SMENT YEAR 2009 - 2010 IN ITA NO.356/CTK/2013, ORDER DATED 9.8.2017, WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER : - 13.3 WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD CAREFULLY. T HE CIT(A) DELETED THE ADDITION MADE BY THE AO IN RESPECT OF PROVISION F OR PENSION FUND OF RS.25,00,00,000/ - FOLLOWING THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE. WE PERUSED THE FINDINGS OF THE CIT(A) ON THE DISPUTED ISSUE WHERE THE ASSESSEE HAS MADE THE PROVISION OF RS.25 CRORES TOWARDS PENSION FU NDS AND WAS REMITTED TO THE PENSION FUND ACCOUNTS AS PER THE SCHEDULE , WHEREAS RECOGNITION OF FUND WAS GRANTED BY CIT ON 3.2.2009. THE LD. CIT(A) RELIED ON COORDINATE BENCH DECISION IN ASSESSEES OWN CASE AND ALLOWED THE GROUNDS OF APPEAL OF THE ASSESSEE A ND OBSERVED AT PARA 7.3 PAGE 5 AS UNDER : - ITA NO. 121 /CTK/201 5 6 ' 7.3 THE HONBLE ITAT, CUTTACK BENCH, CUTTACK IN THECASE OF THE APPELLANT FOR THE AY 2007 - 028 (ITA NO.099/CTK/2011) HELD : NOW COMING TO THE OTHER ASPECT OF CLAIM OF THE ASSESSEE OF RS.40 CRORE AND RS.2,22,524/ - T O PENSION PROVISION FUND AND CONTRIBUTORY PROVIDENT FUND RESPECTIVELY, IT IS FOUND THAT THE DISALLOWANCE WAS MADE ON THE GROUND THAT THE 'FUNDS' WERE YET TO BE RECOGNIZED BY THE COMMISSIONER OF INCOME - TAX. BUT IT IS MADE OUT BY THE ASSESSEE THAT THE APPLIC ATIONS FOR RECOGNITION OF THE FUNDS WAS PENDING BEFORE THE CIT, CUTTACK, FOR A LONG TIME WITHOUT ANY FAULT ON THE PART OF THE ASSESSEE AND ULTIMATELY THE CIT, CUTTACK HAS GIVEN PERMISSION TO THOSE FUNDS W.E.F. 03.02.2009. THEREFORE, THE ACTION OF THE CIT I N GRATING THE RECOGNIZATION TO THE SAID FUNDS FROM 03.02.2009 IS UNFOUNDED AND HENCE, IT IS TO BE RECOGNIZED FROM THE DATE OF APPLICATION MADE BY THE ASSESSEE. CONSEQUENTLY FOR THE CURRENT PERIOD ALSO THE FUND RECOGNIZATION IS APPLICABLE. ACCORDINGLY, THE DISALLOWANCE MADE BY THE DEPARTMENT IS NOT SUSTAINABLE UNDER LAW AND IT IS HEREBY DIRECTED TO BE DELETED'. IN VIEW OF THE ABOVE ORDER OF THE HONBLE TRIBUNAL, THE ADDITION OF RS.25,00,00,000/ - MADE BY THE AO IS DELETED. WE ARE OF THE SUBSTANTIVE VIEW THA T THE ORDER OF CIT (A) ON THE DISPUTED ISSUE RELIED ON THE TRIBUNAL DECISION AND ACCORDINGLY, WE UPHOLD THE ACTION OF CIT(A) ON THIS GROUND AND DISMISS THIS GROUND OF APPEAL OF REVENUE. WE R ESPECTFULLY FOLLOW THE JUDICIAL PRECEDENCE AND DECISION OF THE TR IBUNAL AND UPHELD THE ACTION OF CIT(A) AND DISMISS THIS GROUND OF APPEAL OF REVENUE. 8 . GROUND NO.4 RELATES TO INTEREST ACCRUED O N INVESTMENT ON CAPITAL ASSET. 8 .1 THE DISPUTED ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT Y EAR 2009 - 2010 IN ITA NO.356/CTK/2013, ORDER DATED 9.8.2017, WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER : - 15.3 WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD CAREFULLY AND FOUND THAT THE LD. CIT(A) OBSERVED THAT INTEREST ON FUNDS ARE IN CONNECTION WITH THE REGULAR OPERATIONS OF THE ASSESSEE AND THE AO OBSERVED AS PER THE NOTES ON ACCOUNTS, THE INCOME FROM INVESTMENT OF FUNDS ARE CREDITED DIRECTLY TO THE RESPECTIVE FUND ACCOUNTS AND INTEREST INCOME IS NOT CREDITED TO PROFIT AND LOSS ACCOUNTS, WHEREAS THE ASSESSEE SUBMITTED THAT THE FUNDS WERE CREATED AS PER SPECIFIC DIRECTIONS OF GOVT. OF INDIA AND THE INTEREST ON THE FUNDS ARE UTILISED FOR SPECIFIC DEVELOPMENT OF PORT AND IS NOT ITA NO. 121 /CTK/201 5 7 IN CONNECTION WITH REGULAR OPERATION OF THE BUSINESS. LD. CIT(A) OBSERVE D THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08 IN ITA NO.099/CTK/2011 AND ITA NO.114/CTK/2011, OBSERVED AT PAGE 8 OF THE CIT(A) ORDER, WHICH READS AS UNDER: - CONSIDERING THE ISSUE OF TREATMENT OF RS.42 CRORE BEING INTEREST ON INVESTMENT ON CAPITAL ASSET REPLACEMENT RESERVE FUND AND ON INVESTMENT ON DEVELOPMENT REPAYMENT OF LOAN AND CONTINGENCY RESERVE FUND, AS INCOME OF THE ASSESSEE, IT IS FOUND THAT THESE FUNDS WERE CREATED UNDER THE SPECIFIC DIRECTIONS OF THE GOVT. OF INDIA CONTAINED IN ITS MEMO NO.GR - 15024/7/93 - PG, DATED 16.6.1994 AND NO.P&F - 25/78 DATED 20.3.1978. AS PER THE SAID DIRECTIONS, THE INTERESTS ON THE FUNDS ALONG WITH THE CORPUS THEREFORE REQUIRED TO BE UTILIZED FOR THE S PECIFIC PURPOSES OF DEVELOPMENT OF THE PORT AND NOT IN CONNECTION WITH THE REGULAR OPERATIONS OF THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE ARE OF THE CONSIDERED VIEW THAT THIS IS A DIVERSION OF THE INTEREST AMOUNTS AT SOURCE AND THEREBY THE SAID INTERES T AMOUNTS CANNOT BE ADDED TO THE REVENUE INCOME OF THE ASSESSEE. HENCE, THE CONTENTION TAKEN BY THE DEPARTMENT IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. ACCORDINGLY, THE ADDITIONS MADE BY THE DEPARTMENT ARE HEREBY DIRECTED TO BE DELETED. WE FOUND THAT THIS I SSUE IS SETTLED BY THE COORDINATE BENCH OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2007 - 08 IN ASSESSEES OWN CASE AND ACCORDINGLY, WE UPHOLD THE ACTION OF CIT(A) ON THIS GROUND AND DISMISS THE GROUND OF REVENUE. WE FIND THE ISSUE DEALT IN EARLIER ASSESSMENT YEAR IN ASSESSEES OWN CASE IS SIMILAR AND WE RESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL AND UPHOLD THE ACTION OF CIT(A) ON THIS GROUND AND DISMISS THE GROUND OF APPEAL OF REVENUE. 9 . GROUND NO.5 RELATES TO CAPITAL EXPENDITURE CLAIMED AS REVENUE EXPE NDITURE: 9 .1 LD. DRS CONTENTION THAT THE CIT(A) IS NOT CORRECT IN CONSIDERING THE EXPENDITURE RELATED TO CAPITAL EXPENDITURE AS REVENUE EXPENSES AND THE ASSESSEE HAS ALSO FAILED TO PRODUCE THE DETAILS IN THE ASSESSMENT PROCEEDINGS. LD. AR FILED PAPER BOOK DISCLOSING THE COMPUTATION OF INCOME AND ANNUAL REPORT AND DREW ATTENTION TO PAGE 64 OF THE PAPER BOOK, WHERE OBSERVATIONS ARE MADE BY THE AUDITOR ON ACTION OF THE ITA NO. 121 /CTK/201 5 8 ASSESSEE . ON THE QUERY FROM THE BENCH THE LD. AR SUBMITTED THAT THE ASSESSEE HAS MADE ACCO UNTING SYSTEM IN RESPECT OF TRANS ACTION IN THE SUBSEQUENT FINANCIAL YEAR 2010 - 2011 AND SUPPORTED THE ORDER OF CIT(A) . 9 .2 WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. DRS CONTENTION THAT THE ASSESSEE HAD CLAIMED EXPENDITURE OF RS. 1.43 CRORES AS REVENUE EXPENDITURE, WHEREAS THE SAME IS IN THE NATURE OF CAPITAL EXPENDITURE AND THE AMOUNT WAS SPENT FOR CONSTRUCTION OF CONCRETE PLATFORM S . HOWEVER, THE CIT(A) CONSIDERING THE ASSESSEES SUBMISSIONS AND THE AUDIT REPORT OBSERV ED TH E ASSESSEE HAS TAKEN STEPS TO INCLUDE THE SAID AMOUNTS IN TOTAL INCOME AND DISCLOSED A TAXABLE. WE ARE OF THE OPINION THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM BEFORE THE REVENUE AUTHORITIES WITH PROPER ACCOUNTING STATEMENTS AND ALSO THE ACCOUNTIN G ENTRIES ARE MADE IN THE FINANCIAL YEAR 2010 - 2011 AND NOT IN THE CURRENT ASSESSMENT YEAR. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) ON THIS GROUND AND REMIT THE ENTIRE DISPUTED ISSUE TO THE FILE OF AO TO EXAMINE AND VERIFY AND PASS THE ORDER AFTER CON SIDERING THE ACCOUNTING STATEMENTS FILED BY THE ASSESSEE AND THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING . ACCORDINGLY, THIS GROUND OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 10 . GROUND NO.6 RELATES TO ALLOWANCE OF DEPRECIATION @15% ON RAILWAYS AND ROLLING STOCK TREATING THE SAME AS PLANT AND MACHINERY AS AGAINST DEPRECIATION @ 10% ALLOWED IN THE CURRENT ASSESSMENT YEAR . ITA NO. 121 /CTK/201 5 9 10 .1 THIS DISPUTED ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.356/CTK/2013 FOR THE AS SESSMENT YEAR 2009 - 2010, ORDER DATED 9.8.2017, WHEREIN THE TRIBUNAL OBSERVED AS UNDER : - 19.3 WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD CAREFULLY AND FOUND THAT THE FIXED ASSETS SERVE SOME SPECIAL PURPOSES IN THE WORKING OF THE ASSESSEE AND S HOULD BE TREATED AS PLANT AND MACHINERY IN THE OPERATING PROCESS OF THE ASSESSEE. THE CIT(A) RELIED ON THE ORDER OF ITAT IN ASSESSEES OWN CASE AND OBSERVED AT PAGE 16 PARA 16.3 OF THE ORDER AS UNDER : - 16.3 THE HON'BLE ITAT.CUTTACK BENCH, CUTTACK IN T HE CASE OF THE APPELLANT (ITA NO.099/CTK/2011 FOR ASSESSMENT YEAR 2007 - 08 & ITA NO. 11 4/CTK/2011 FOR ASSESSMENT YEAR 2007 - 08) HELD: 'THE ASSESSEE WAS DENIED OF THE HIGHER RATE OF DEPRECIATION ON THE ASSETS FINDING THAT THEYARE NOT 'PLANT & MACHINERY'. BUT AS CAN BE SEEN FROM THE ADMITTED FACTS AND CIRCUMSTANCES OF THE CASE, THE FIXED ASSETS SERVE SOME SPECIAL PURPOSE OF THE WORKING AND THEREBY THEY ARE CONSIDERED AS 'PLANT & MACHINERY' IN THE WORKING PROCESS OF THE ASSESSEE. THIS CLAIM OF THE ASSESSEE IS FO RTIFIED BY THE DECISION OF HON'BLE SUPREME COURT RENDERED IN THE CASE OF CIT V. DR. B.VENKATRAO (243 ITR 82), CCI(ADMN) V. VISWESARAYYA IRON & STEEL LTD.,KARNATAKA (199 ITR 98) AND KALINGA TUBES LTD. V. CIT (96 ITR 20). IN THE LIGHT OF THE DICTUMS STATED SUP RA, THE ASSESSEE'S CLAIM IS SUBSTANTIATED AND HENCE FOUND ENTITLED TO HIGHER RATE OF DEPRECIATION AT 15% ON THE FIXED ASSETS AS CLAIMED BY THE ASSESSEE.' IN VIEW OF THE ABOVE ORDER OF THE HON'BLE TRIBUNAL THE APPELLANT IS ENTITLED TO DEPRECIATION @15% ON RAILWAYS AND ROLLING STOCK WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE CIT(A) ON TH IS GROUND AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. THUS, APPEAL OF THE REVENUE IS DISMISSED. WE R ESPECTFULLY FOLLOW THE DECISION OF THE TRIBUNAL AND JUD ICIAL PRECEDENCE ON THE DISPUTED ISSUE . ACCORDINGLY, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS GROUND AND DISMISS THIS GROUND OF APPEAL OF REVENUE. ITA NO. 121 /CTK/201 5 10 11 . IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 24 / 10 / 201 7 . SD/ - ( N. S. SAINI ) SD/ - ( PA V AN KUMAR GADALE ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK ; DATED 24 / 10 /201 7 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//